20 Billion Yuan Fund Set Up by Baidu to Back Startups, Other Internet Projects

A new fund has been set up by Chinese search engine Baidu to finance startups that are in mid- and late-stages of development, the company announced on Wednesday, Oct. 12.

A report by Xinhua News Agency said that about 20 billion yuan ($2.98 billion) has been raised by Baidu Capital, a private equity-style fund, in its first round of investment, in which about $50 million to $100 million has been allocated for each project.

According to a report by techcrunch.com, the capital for the new fund will not come from Baidu alone but also from large insurance funds, securities companies and others. The company will also pull in two or three managing partners from the investment industry, the report said.

Chaired by CEO Robin Li, Baidu Capital, will operate independently and will fund projects involved in Baidu's industrial chain as well as other Internet projects.

In September, the Chinese Internet giant also announced the establishment of a venture capital firm called Baidu Venture to invest in the three emerging fields of technology which include artificial intelligence (AI), virtual reality (AR), augmented reality (AR) and other innovative fields in their early stages. A $200 million fund has been allocated for the venture capital firm.

In August, a JP Morgan analyst warned that unless Baidu makes a breakthrough in its high-tech initiatives such as AI, the company risks of stagnation as it has no visible growth drivers beyond search.

With the establishment of the fund, Baidu has now joined the growing number of Internet companies such as Alibaba and Tencent, which established funds to help them expand and improve their business.

For years, Baidu has been actively investing in several startups, which included investments in the consumer finance company Circle and the underwriting technologies company ZestFinance.

In 2013, the company created a deep-learning research institute. It has also been reportedly invested about 15 percent of its revenue in research and development, the techcrunch.com report said.